The MAJOR property crash is coming

Dannyboy83

These 2 articles show the future of what is to come with the property market in Ireland.
We are on the cusp of THE major crash.
Personally I believe it will be less than 12 months until the major crash really happens, at which stage Irish house prices will return to 2.5 to 3x the average industrial wage MAX.
It's likely many, many houses will fall far below that as properties will be bought and sold for cash.

It's a catch 22 situation. There is no exit.

Mortgage market wipeout
http://www.independent.ie/business/irish/collapse-of-lending-for-new-mortgages-is-gathering-pace-2442935.html

The value of mortgages given out in July, August and September has crashed by more than 40pc when compared with a year earlier.

Just 7,261 people took out a mortgage in the three months at the end of the summer, compared with almost 55,000 for the same three-month period at the height of the housing boom in 2006.
====
The value of the mortgages drawn down in July, August and September of this year was just €1.2m. This compares with €11bn in the third quarter of 2006.
====
Director of the Irish Mortgage Corporation Frank Conway said the latest statistics showed the mortgage market continued to be wiped out. "In the third quarter 2006, there were a total of 54,623 mortgages drawn down. Today, this figure has been reduced to 7,261, a fall of almost 87pc.

"This is as much of a market wipeout as one could have feared just four short years ago," said Mr Conway.
==
Bloxham economist Alan McQuaid said there was very little good news in the latest figures from the Central Bank, with no sign that the trend would change any time soon.

"Until the banking sector crisis is fully resolved and things improve on the labour market front, then the supply and demand for credit will remain subdued, in our view," he said.

http://www.independent.ie/national-news/irelands-drop-in-house-prices-is-worst-in-world-2438385.html

HOUSE prices in Ireland have deteriorated further than any other country in the world, a new survey has revealed.

The Global Property Guide (GPG) yesterday said Irish prices were down by 14.94pc over the year to the end of September. This has placed Ireland at the bottom of a house price league for 35 countries.

This comes in the wake of a report by credit rating agency Standard & Poors, which predicted in June that house prices in Ireland would fall by another 10pc this year before reaching the bottom in 2011.

deise go deo

Dannyboy83 wrote: »

These 2 articles show the future of what is to come with the property market in Ireland.
We are on the cusp of THE major crash.
Personally I believe it will be less than 12 months until the major crash really happens, at which stage Irish house prices will return to 2.5 to 3x the average industrial wage MAX.
It's likely many, many houses will fall far below that as properties will be bought and sold for cash.

It's a catch 22 situation. There is no exit.

I think you might be 2 years late there OP.

Fratton Fred

I'm looking forward to Kellogs giving away a free apartment with every box of cornflakes.

Seriously, I think there is more to come when NAMA start selling off whole blocks of apartments, but I can't see a huge crash coming.

Cuddlesworth

Fratton Fred wrote: »

I'm looking forward to Kellogs giving away a free apartment with every box of cornflakes.

Seriously, I think there is more to come when NAMA start selling off whole blocks of apartments, but I can't see a huge crash coming.

There will be more to come when the social welfare subsidising of the rental market gets cut.

sealgaire

It's a great thing really

gurramok

Indo wrote:

HOUSE prices in Ireland have deteriorated further than any other country in the world,

They went up the highest in the first place.

Indo wrote:

"Until the banking sector crisis is fully resolved and things improve on the labour market front, then the supply and demand for credit will remain subdued, in our view," he said.

Mass emigration means hell of alot less buyers around too Mr. McQuaid.

Dannyboy83

deise go deo wrote: »

I think you might be 2 years late there OP.

:rolleyes:
Thanks for that.

I'm referring to a MAJOR crash, as Morgan Kelly has alluded to, i.e. houses being bought and sold for Ca$h

Fratton Fred wrote: »

I'm looking forward to Kellogs giving away a free apartment with every box of cornflakes.

Seriously, I think there is more to come when NAMA start selling off whole blocks of apartments, but I can't see a huge crash coming.

Doubt the NAMA stuff will be released tbh.
Although there will be colossal losses made on it either way.

deise go deo

Until the banking sector crisis is fully resolved and things improve on the labour market front, then the supply and demand for credit will remain subdued, in our view," he said

The phrase No Sh!t Sherlock comes to mind.

Seriously though, While prices may continuue to fall, in the absence of something major like the fall of the euro then I dont see why there would be a second Crash in prices

Liam Byrne

Dannyboy83 wrote: »

These 2 articles show the future of what is to come with the property market in Ireland.
We are on the cusp of THE major crash.
Personally I believe it will be less than 12 months until the major crash really happens, at which stage Irish house prices will return to 2.5 to 3x the average industrial wage MAX.

Those of us who didn't fall for the whole fiasco would view that as a "recovery", i.e. a return to normality.

That's why I have such an objection to NAMA and Lenihan's twisting of English waffling about profits "when the property market recovers".

Dannyboy83

deise go deo wrote: »

The phrase No Sh!t Sherlock comes to mind.

Seriously though, While prices may continuue to fall, in the absence of something major like the fall of the euro then I dont see why there would be a second Crash in prices

Well for a start, because

• 80% of people were refused a mortgage
  
• Because emigration is expected to run at 100,000 over the next 4 years

• Because Rent Relief is gone from December 7th
  
• Because Mortgage Interest Relief is gone
  
• Because Public Sector Wages and Social Welfare is going to be reformed.
  
• Because the Average National wage has fallen from €36,000 to €31,000 euro, and the tax burden has increase by approximately €4,500
  
• Because 100,000 mortgages are in trouble and that number will double at least over the next 4 years.
  
• Because banks are going to start charging higher rates of interest which will cause more defaults.
  
• Because supply massively exceeds demand, even without NAMA

There are too many reasons to go into, but that's just a select few.

Dannyboy83

p.s.

Never thought I'd see this in my lifetime

Newly built 2 bed apartment on outskirts of Cork city for €100,000
http://www.daft.ie/searchsale.daft?id=484848&search=1

That's just a taste of things to come. (You'd want to be on some mind altering drugs to go buy that now when our economy is about to deflate 25 to 50% over 4 years!)

Bill2673

Note to anyone wondering what house prices might do in the next 12 months:

(i) There is nothing in this thread to suggest the MAJOR house price collapse is on the way.

(ii) House prices have already fallen by 60% from peak. No matter what way you cut it, even if house prices go down all the way to zero, the major part of the house price decline has already taken place.

deise go deo

Dannyboy83 wrote: »

Well for a start, because

• 80% of people were refused a mortgage
  
• Because emigration is expected to run at 100,000 over the next 4 years

• Because Rent Relief is gone from December 7th
  
• Because Mortgage Interest Relief is gone
  
• Because Public Sector Wages and Social Welfare is going to be reformed.
  
• Because the Average National wage has fallen from €36,000 to €31,000 euro, and the tax burden has increase by approximately €4,500
  
• Because 100,000 mortgages are in trouble and that number will double at least over the next 4 years.
  
• Because banks are going to start charging higher rates of interest which will cause more defaults.
  
• Because supply massively exceeds demand, even without NAMA

There are too many reasons to go into, but that's just a select few.

Yes, and as I said House prices will in all probability continue to fall as a result of those factors but regardless of that there will still be people wanting to buy there own home, These people are, Quite naturally waiting because they know they will fall further but individuals will not wait more than a few years, The property market will continue to tick over, To imagine that it will recover upwards from where it is now would be rediculus but I dont see any reason to suggest a second crash is imminent.

Oafley Jones

Dannyboy83 wrote: »

p.s.

Never thought I'd see this in my lifetime

Newly built 2 bed apartment on outskirts of Cork city for €100,000
http://www.daft.ie/searchsale.daft?id=484848&search=1

That's just a taste of things to come. (You'd want to be on some mind altering drugs to go buy that now when our economy is about to deflate 25 to 50% over 4 years!)

Still overpriced.

Dannyboy83

Bill2673 wrote: »

Note to anyone wondering what house prices might do in the next 12 months:

(i) There is nothing in this thread to suggest the MAJOR house price collapse is on the way.

Yes there is, read the thread

(ii) House prices have already fallen by 60% from peak. No matter what way you cut it, even if house prices go down all the way to zero, the major part of the house price decline has already taken place.

No, not uniformly.
Many, many houses in Cork are still advertised at 240k for example.
That is 8 times a person's annual income.
Traditionally, before the bubble, houses were priced at 2.5 to 3x the average industrial wage.

http://www.voxeu.org/index.php?q=node/5040

Figure 2. Irish house prices relative to average industrial earnings, 1980 – 2009



Figure 3. Irish new house prices and first time buyer mortgages relative to average industrial earnings, 1990 – 2009

handlemaster

Dannyboy83 wrote: »

p.s.

Never thought I'd see this in my lifetime

Newly built 2 bed apartment on outskirts of Cork city for €100,000
http://www.daft.ie/searchsale.daft?id=484848&search=1

That's just a taste of things to come. (You'd want to be on some mind altering drugs to go buy that now when our economy is about to deflate 25 to 50% over 4 years!)

I would say they won't sell at that price. Its looks expensive still.

jimmycrackcorm

We'll know when the market is corrected when a typical house costs 2.5 times the primary salary + 1 times a second, just like the old days.

Of course, wages have to stabilize too for that to hold true.

Dannyboy83

handlemaster wrote: »

I would say they won't sell at that price. Its looks expensive still.

These are already sold out.

But you are right in that, generally, those who are capable of buying, are not willing to do so.

Given that we are about to become a high tax economy with virtually no services provided in return, Brain Drain is going to kick in massively again as it did the in the 80s.

A lot of friends who finished college with me haven't bought because they weren't able to, they were waiting.
Now most of them are saying that they won't buy, it would be kamikaze, because they may well need to emigrate.

Dannyboy83

jimmycrackcorm wrote: »

We'll know when the market is corrected when a typical house costs 2.5 times the primary salary + 1 times a second, just like the old days.

Of course, wages have to stabilize too for that to hold true.

It depends on interest rates of course, but I agree with that.

Loads of the talker-uppers/soft landing-ers kept repeating over and over that we'd never see 7% interest rates again in Ireland.

That was before bond rates shot up to 9% and before the IMF/ECB arrived and we received bailout money at 5.8% variable.

ECB rates will rise, just a matter of time.

We should have had a healthy recession in 2001, which would have brought things back to normality.
Instead the whole thing was inflated.

The bigger the boom, the bigger the bust!

Dannyboy83

One thing I'm curious about is the impact of LTV

We will have LTV by 2013.

This potentially reduce rental yield by 1/8th to 1/4 per month (at current rates)!
That is a serious adjustment.
We need to look back to pre-1977 since we had that situation in Ireland.

Now rent relief is gone and rent allowance is due to be reduced.
I think LTV & water rates are going to massively drive down the yield on rents and consequently, the price of property.

Dannyboy83

deise go deo wrote: »

Yes, and as I said House prices will in all probability continue to fall as a result of those factors but regardless of that there will still be people wanting to buy there own home, These people are, Quite naturally waiting because they know they will fall further but individuals will not wait more than a few years, The property market will continue to tick over, To imagine that it will recover upwards from where it is now would be rediculus but I dont see any reason to suggest a second crash is imminent.

Where will they get money to buy?

dreenman

What actually happens in a slump like this is that house sales almost stop.

I would expect new house prices will fall to a level where people can afford them - if mortgage lending ever starts. However the second hand house market freezes because people can not afford to sell - and that is why markets like this bottom out. No one is going to sell a house if it leaves them 100000 euro in debt! So to many people the 'market value' of their house is academic until it is worth the same as their mortgage.

That is why many people now in their twenties and thirties will live in their current house for the rest of their lives which is in itself a return to times past.

Kiki10

The fact homes are becoming cheaper is wonderful. I don't give a rats ass for the greedy blood suckers who trampled on first time buyers in order to grab a quick buck to blow on hookers & Bentleys. I hope all the latte drinking political correctness comes to and end too!

Kiki10

dreenman wrote: »

What actually happens in a slump like this is that house sales almost stop.

I would expect new house prices will fall to a level where people can afford them - if mortgage lending ever starts. However the second hand house market freezes because people can not afford to sell - and that is why markets like this bottom out. No one is going to sell a house if it leaves them 100000 euro in debt! So to many people the 'market value' of their house is academic until it is worth the same as their mortgage.

That is why many people now in their twenties and thirties will live in their current house for the rest of their lives which is in itself a return to times past.

Its a nice theory but iv seen a lot of people abandon there homes to emigrate. I know one couple renting, only to be told by the bank, that the landlord they were paying hadn't payed the mortgage in over a year and the rent was starting them in Australia. Anyone who gets to pay a 2008 size mortgage after the IMF money runs out will have won the lotto. It wont come from working as a slave.

Highly Salami

Dannyboy83 wrote: »

Where will they get money to buy?

by getting a mortgage (of course!)

Dannyboy83

Highly Salami wrote: »

by getting a mortgage (of course!)

From who?

Dannyboy83

Kiki10 wrote: »

Its a nice theory but iv seen a lot of people abandon there homes to emigrate. I know one couple renting, only to be told by the bank, that the landlord they were paying hadn't payed the mortgage in over a year and the rent was starting them in Australia. Anyone who gets to pay a 2008 size mortgage after the IMF money runs out will have won the lotto. It wont come from working as a slave.

It also doesn't account for executor sales, inherited properties etc.

It really only accounts for FTBs from about 99/00 onward, about 1 decade.

Highly Salami

Dannyboy83 wrote: »

From who?

Banks/building societies.
Irish banks have been massively capatalised recently. If you still don't think they will lend, there are always foreign banks (National Irish Bank are owned by Danske Bank).

yosser hughes

Bill2673 wrote: »

Note to anyone wondering what house prices might do in the next 12 months:

(i) There is nothing in this thread to suggest the MAJOR house price collapse is on the way.

(ii) House prices have already fallen by 60% from peak. No matter what way you cut it, even if house prices go down all the way to zero, the major part of the house price decline has already taken place.

Read the thread. You are offering an opinion backed up by eh...nothing. We ain't seen nothing yet.

Kiki10

Dannyboy83 wrote: »

It also doesn't account for executor sales, inherited properties etc.

It really only accounts for FTBs from about 99/00 onward, about 1 decade.

It just makes me sick to even think about it... its getting harder to even laugh at this

Dannyboy83

Highly Salami wrote: »

Banks/building societies.

Irish banks have been massively capatalised recently. .

As you've seen from the posts so far in this thread, 80% of people are being refused mortgages.
That is going to get worse, not better.
(If you pay more and more tax, on the same salary - how do you qualify for the same mortgage? Answer is: you don't!)

The ECB have set a fractional reserve of 100:8 for Irish banks.

The banks are going to have to restrain lending until it is line with the amount of deposits. We know that there have been massive capital flights from the banks, and they're being recapitalised (yet again), yet that that is only temporary.

Simply by attrition through falling salaries and rising tax demands, the current capital reserves are going to be swallowed up by more and more defaults.

There are 800,000 mortgages from the last decade.
100,000 are currently in big trouble.
Public servants own disproportionately more properties than the private sector, as they've had the massive salaries.

So the public sector wage bill in 2009 was €19.8 billion for 330k people, compared to €7 billion in 1999.
The MNC private sector wage bill in 2009 was was €7 billion for 270k people.

Public sector pay is only going to go one direction. And that is down.
And property prices will go with it.
And defaults will go up.

Even if public servants salaries are not reduced, their available income will be, through tax increases. Just depends on the route chosen.
Factor in interest rates then and you have a catastrophe, waves of defaults.

Let me quote the original article again:

The value of the mortgages drawn down in July, August and September of this year was just €1.2m. This compares with €11bn in the third quarter of 2006.

Assuming a third of those mortgages from summer 2006 go in trouble, that's an almighty hole in a bank's reserves, meaning no new lending and more bailouts, increasing interest rates.
It's a vicious circle and the problem becomes compound.

If you still don't think they will lend, there are always foreign banks (National Irish Bank are owned by Danske Bank)

I have it on good word that the foreign banks are trying to get the hell out of Ireland, e.g. ACC bank & Nobody staying behind wants to lend into a collapsing country/property market, until they are sure the collapse is complete.
We still have 4 years and €15billion worth of collapsing to do.

A colleague of mine applied to a French bank to buy a property in Ireland and was told, bluntly, no chance - not for Ireland.


In order to sustain the price of houses, you need to sustain similar levels of lending - that's simply not going to happen.

http://www.voxeu.org/index.php?q=node/5040

Figure 1. Bank lending to households and non-financial firms as a percentage of GDP (GNP for Ireland), 1997 and 2008.

Overheal

The fact is you should have had your crash already, and the fact that you haven't is only the product of government intervention.

dreenman

Kiki10 wrote: »

Its a nice theory but iv seen a lot of people abandon there homes to emigrate. I know one couple renting, only to be told by the bank, that the landlord they were paying hadn't payed the mortgage in over a year and the rent was starting them in Australia. Anyone who gets to pay a 2008 size mortgage after the IMF money runs out will have won the lotto. It wont come from working as a slave.

Well its not so much a theory as my simplistic understanding as to what happened in the UK & Japan in their slumps a couple of decades ago.

I must be living in the wrong areas but unlike you I havent seen anyone (never mind lots) abandon their home to emigrate but yes I am sure it happens.

So I will go with your experience and if thousands of families emigrate and abandon properties then the economy crashes into depression, industry/employment stops, population drops and what remains of the banks collapses to zero. The country becomes a ghost land those who are left are either poverty stricken or are rich. So who is going to buy the properties? - not the ordinary man/woman he has no income at all and not the rich as there is no return on their investment.

So my point remains that the house market stops - the houses may be being offered at lower values but there is no one to buy them! Squatting may become the lifestyle choice!

We have had the hard landing with regards to property the next stage if the economy doesnt improve goes way beyond house prices falling indeed is much more serious - a full blown depression, poverty and a third world living standards.

danbohan

Bill2673 wrote: »

Note to anyone wondering what house prices might do in the next 12 months:

(i) There is nothing in this thread to suggest the MAJOR house price collapse is on the way.

(ii) House prices have already fallen by 60% from peak. No matter what way you cut it, even if house prices go down all the way to zero, the major part of the house price decline has already taken place.

agh , a sort like ''we have turned the corner ''

did i hear that somewhere before ?

Bottle_of_Smoke

Those graphs are incredible. Though it must be pointed out that double income families have increased a lot since the 80s and play a huge role in inflating house prices.

the groutch

property prices might drop, but HOUSE prices won't

there ARE houses selling all over the country and that market is bottoming out

the problem is the rediculous amount of apartments in the middle of nowhere, where you have to run a car if you're going to live there eg. Sandyford, Stepaside, Belarmine.

irishh_bob

the OP is absolutley correct , property has a long way to fall yet , property is becoming toxic , even those who can afford to buy wont as thier is a serious deterrant with the introduction of a property tax , part of the reason prices went so high during the boom was due to the phenomenon of people owning more than one property , taxes on second and third homes are likely to be punaitve , thier is plenty of political capital to be made from coming down hard on the likes of frank fahey , therefore the wealthy wont touch property no matter how cheap it is

we are in an anti real estate era now , kids will grow up witnessing thier parents struggling with huge mortgages , the age old irish obsession with property could be at an end or at least a serious mindset shift

foxy06

sandyford is the middle of nowhere??

Dannyboy83

Add this to the list of reasons why the major crash is coming

http://www.boards.ie/vbulletin/showpost.php?p=69339504&postcount=19

THE IRISH REFORMATION

1. lowering of income tax bands and credits by 10% to yield an additional €945m in 2011 and an extra €300m in a full year

2. reduction in pension tax relief and pension related deductions

3. Social Protection expenditure reductions

4. reduction of PS employment numbers in 2011

5. reduction of existing PS pensions on a progressive basis averaging 4%

6. reduction of at least €1,800m in public capital expenditure against existing plans for 2011

7. extension of NAMA to a further €16bn of land and development loans in AIB and BOI

8. further reductions in the size of the banks

9. government to divest itself of bank participation as quickly as possible

10. minimum wage levels down by €1.00/hour

11. removal of restrictions to trade and competition in sheltered sectors - including the legal profession (implementing the recommendations of the Legal Costs Working Group), medical services (eliminating restrictions on the number of GPs qualifying) as well as restrictions on advertising and treating public patients, and the pharmacy sector - ensuring the elimination of the 50% markup under the Drugs Payment Scheme is enforced

12. looking at removing the cap on retail premises size

13. indexation of PS pensions, basis of pensions to be average career salary, new PS entrants to see a 10% pay reduction

14. banking regulation and supervision to be strengthened

15. reform of personal insolvency regime, including sole traders

16. retention of means-tested mortgage interest supplement scheme

17. agreement by AIB and BIO to provide targeted lending of €3bn each for SMEs in both 2010 and 2011

Dannyboy83

Potential for major damange.

http://www.ronanlyons.com/wp-content/uploads/2010/11/scale-of-the-problem.png

thebman

People saying the market is bottoming out are living in lala land.

Banks can't lend even if they wanted to as they are overexposed on lending as it is and are now being monitored to ensure they don't do anything stupid.

Potential borrowers won't borrow as they are afraid of what is to come and the banks will be harder on testing to see can people make repayments. Also the general opinion is that house prices will continue to fall so people are holding off.

People are leaving the country and many that aren't are loosing their jobs.

And this is before we look have waves of repossessions that are shortly coming as many people have not been able to pay off their mortgages for a long time already and eventually the banks do have to repossess the houses to try to regain some of their money and banks won't hold on to property to see its long term economic value.

NAMA properties will come online as it is paying developers to finish ghost estates so our already massive oversupply is actually getting bigger again.

In the future, I see a two-tiered housing market. The fire-sale houses will be those built in the boom as they have poor energy ratings which will have to be displayed when they are sold and this will be a beacon that it is a house built during the boom and that the people selling probably have high mortgages they are struggling to afford and want out. The only way around that will be if those people invest in upping the energy rating which many will not be able to afford to do.

The newer houses built to newer standards (that should have been introduced before the boom in the first place and were being discussed at the time but FF never bothered), will sell at much higher prices but still closer to market rates.

What people have to be aware of too is that there is no appetite for owing a house with the next generation as they see the ball and chain it is for their brothers/sisters/parents so they will have no problem simply not buying to avoid that issue. That and people are moving jobs more so it makes less sense to buy a house in an area as it ties you down to an area you will probably not be working in for the rest of your life.

Seriously how can anyone suggest the housing market will recover within the next 5 years given the above?

dreenman

thebman wrote: »

Seriously how can anyone suggest the housing market will recover within the next 5 years given the above?

Well I dont see anyone on this thread suggesting the housing market will recover in 5 years.

It seems to me that you are missing the point, the biggest falls in property prices have already occurred in terms of the monetary value and that money will not be recovered without say 10-20 years of economic growth.

The next stage in a collapsing economy goes way beyond the price of your precious house - the housing market become irrelevant . A further economic downturn will be full blown depression with mass emigration, poverty and starvation - not sure why you are so fixated on property?

Dannyboy83

dreenman wrote: »

The biggest falls in property prices have already occurred in terms of the monetary value

Why?
Where?

The next stage in a collapsing economy goes way beyond the price of your precious house - the housing market become irrelevant . A further economic downturn will be full blown depression with mass emigration, poverty and starvation - not sure why you are so fixated on property?

The impending property crash is what will drive the country into depression.
Have you read the thread?

Kiki10

dreenman wrote: »

Well its not so much a theory as my simplistic understanding as to what happened in the UK & Japan in their slumps a couple of decades ago.

I must be living in the wrong areas but unlike you I havent seen anyone (never mind lots) abandon their home to emigrate but yes I am sure it happens.

So I will go with your experience and if thousands of families emigrate and abandon properties then the economy crashes into depression, industry/employment stops, population drops and what remains of the banks collapses to zero. The country becomes a ghost land those who are left are either poverty stricken or are rich. So who is going to buy the properties? - not the ordinary man/woman he has no income at all and not the rich as there is no return on their investment.

So my point remains that the house market stops - the houses may be being offered at lower values but there is no one to buy them! Squatting may become the lifestyle choice!

We have had the hard landing with regards to property the next stage if the economy doesnt improve goes way beyond house prices falling indeed is much more serious - a full blown depression, poverty and a third world living standards.

Its scary to think about but its one possible path. The truth is that in 4 years we wont have anyone to bum money off. Unless FG & Lab can pull a very big rabbit out of a very small hat were up the creek. We badly need to increase employment. If we still have so many unemployed in 4 years & the crazy debt[that we will have] no bond market will touch us. Its time we started living on our tax take, in many country's civil servants get perks like houses. In our current situation with the government effectively owning every house & mortgage, things like this could reduce wages & lessen our need for cash?

Kiki10

dreenman wrote: »

Well its not so much a theory as my simplistic understanding as to what happened in the UK & Japan in their slumps a couple of decades ago.

I must be living in the wrong areas but unlike you I havent seen anyone (never mind lots) abandon their home to emigrate but yes I am sure it happens.

So I will go with your experience and if thousands of families emigrate and abandon properties then the economy crashes into depression, industry/employment stops, population drops and what remains of the banks collapses to zero. The country becomes a ghost land those who are left are either poverty stricken or are rich. So who is going to buy the properties? - not the ordinary man/woman he has no income at all and not the rich as there is no return on their investment.

So my point remains that the house market stops - the houses may be being offered at lower values but there is no one to buy them! Squatting may become the lifestyle choice!

We have had the hard landing with regards to property the next stage if the economy doesnt improve goes way beyond house prices falling indeed is much more serious - a full blown depression, poverty and a third world living standards.

Its scary to think about but its one possible path. The truth is that in 4 years we wont have anyone to bum money off. Unless FG & Lab can pull a very big rabbit out of a small hat were up the creek. We badly need to increase employment. If we still have so many unemployed in 4 years & the crazy debt[that we will have] no bond market will touch us. Its time we started living on our tax take, in many country's civil servants get perks like houses. In our current situation with the government effectively owning every house & mortgage, things like this could lessen our need for cash?

Dempo1

Dannyboy83 wrote: »

:rolleyes:
Thanks for that.

I'm referring to a MAJOR crash, as Morgan Kelly has alluded to, i.e. houses being bought and sold for Ca$h



Doubt the NAMA stuff will be released tbh.
Although there will be colossal losses made on it either way.

I agree with the OP, the property market is a mess and getting worse by the day. Firstly there is little if any mortgages being given or applied for. Secondly prices have plummeted and there seems be no sign of the values decreasing or stabilizing, even beyond what was described as inflated prices. Thirdly the mortgage crisis is about to implode with large scale repossessions envisaged next year. I sincerely believe the current amount of mortgage is arrears has been masked by forced forbearance on behalf of the banks, coupled with people cashing in on mortgage payment protection insurance policies which are about too dry up (normally pay out for 12 months). Some might argue this does not impact on the market? i would beg to differ as the impact will severely curtail any possibility of banks offering mortgages, as it is some are loosing their shirts on trackers.

Notwithstanding the above, the banks are in ****e, some have already exited the mortgage sector and the dogs on the street know they are avoiding new mortgage business like the plague.

You only have to take an occasional look in auctioneers windows to see ZERO movement or sales and massive reductions in asking prices.

I susepct another bailout when the mortgage crisis hits the fan!

dreenman

Dannyboy83 wrote: »

Why?
Where?

The impending property crash is what will drive the country into depression.
Have you read the thread?

Yes I have read the thread and I probably have a more pessimissitic view of the economy than you! We have moved beyond the property crash into the question of can the real economy recover or survive?

You questioned how the majority of the monetary value has already been lost even your sources illustrate that. The graph on property values 2006 - 2008 show a 30% + drop. Everybody knows the fall in prices has continued unabated with even conservative estimates say 60% drop from the peak. A 350,000 euro house in 2006 is now worth 140,000 a fall of 210,000. Even a fall of 100% to zero would be be less than the monetary value already lost!!

As I have said the property market has stopped, its dead! If they cant sell flats in Donegal for the price of a second hand car and yet you cant buy a decent family home in Galway City for 150,000 then the market is dead. Any values are theoretical.

The element of the economy relating to property and construction is gone, there is no property based industry left - we are now reliant on the 'real' economy - the source of the average industrial wage that you refer to.

If the real economy shrinks then we enter depression and a third world economy. Those left will be able to walk into abandoned houses - something I think should already be happening BTW.

I fully agree with the graphic titled "the bigger the boom, the bigger the bust" except it is clear we are already well down the 'capitulation' slope which shows that there is no bigger crash to come just a continued slide.

So my point is we have moved on from property prices being the cause of economic crisis(we all know that) to the hope that manufacturing, agricultures and services can save us. Otherwise the next decade will make the 1930's look like the halcyon days.

yoshytoshy

After all the messing the government has done with the banks ,we haven't really seen them trying to stand on their own too feet.

If the government are relying on an exodus to stablise the economy ,who's going to buy anyways ?
Houses will be dead money for a long time to come ,so I can't see people investing either.

Inverse to the power of one!

Will there be a value where foreign speculators become interested? Theoretically there should be as they will have lots of Capital and the pick of the litter when it comes to location.

The actual value of what is for Sale.......By international standards Irish places were built to very high standards with expensive finishes and materials.....At some point the value of what the building is actually made of will mean that the value offered by the price will be an opportunity for those well placed to take advantage.

The return of normal valuation to the Irish market. During the boom times you could buy a palace and a pile of dog poo and you would be expected to pay the same for both. The actual value of what was for sale did not match the price, and prices were not distributed as you would expect in a normal market. With the recession, this has somewhat returned, but there is probably more to come.

Don't mistake me as an optimist here, I'm just trying to read what may come of the market in the future, the above conditions will eventually be met, it's just a matter of when.

Treehouse72

Some great posts by Dannyboy83 in this thread. I've taken the liberty of using one of his graphs, from Morgan Kelly, to illustrate what "We are at or near the bottom" would look like:






I am not a maths or graph expert, but that looks like an exceptionally odd graph to me.

galwayrush

Looks like i'll be better off losing my house with mortgage and buying one for a fraction of what i owe for cash, in my wife's name.....:pac::pac: